CORPORATE

SOCIAL

RESPONSIBILITY

2017

CORPORATE SOCIAL RESPONSIBILITY AT CARGOLUX

WE FLY IT WORLDWIDE – LUXEMBOURG

Cargolux has been a signatory to the United Nations Global Compact, and enthusiastically committed to applying its principles, since 2007. The airline also actively supports the 17 Sustainable Development Goals (SDGs), which came into effect in 2016 and form the heart of the UN’s Agenda 2030.
The airline has selected seven priority goals that fit into its four CSR pillars of Environment, People, Communities and Customers.

Cargolux recognizes its responsibility for addressing environmental issues and is excited to be involved in raising awareness among its staff and within the industry. Sustainability makes sense. The airline’s commitment is ongoing and strong. Cargolux knows that by endorsing the Sustainable Development Goals it can help lead the industry to a better understanding of options and potential. We are in this together. Each saving, whether fuel or paper; each reduction, whether noise or CO2 emissions; is another step towards better business and a better environment.

Cargolux is deeply rooted in Luxembourg.
It is a home-grown success story, and as such, one of the key players in the local transportation industry. Cargolux ranks in the top ten most attractive employers and is an outstanding ambassador for the Grand Duchy. Just as Luxembourg’s national branding encourages its businesses and population with a ‘Let’s make it happen’, Cargolux does; You name it, we fly it.

Cargolux’s deep roots in the country hail back to its inception in 1970. This longevity has awarded it strong ties with local government, communities and other industry organizations. The company’s commitment includes promoting cultural and sports activities at home and abroad, as well as education, research and support for humanitarian NGOs.

Over the last decade especially, the logistics industry has seen the rapid introduction of green technologies, process automation, software systems and high-tech advances in warehousing and tracking systems, as well as more collaboration in the supply-chain. The ‘Cargolux 2025’ strategy, prepares the company to take on the challenge of the digital age. It aims at ensuring a sustainable future of digitalization and innovation.

The company’s CSR program, in place since 2008, uses input from stakeholders and aligns with business development goals. Despite the highly competitive nature of the air freight industry and challenging conditions in past years, Cargolux has eagerly upheld its commitment to Corporate Social Responsibility.

MESSAGE FROM THE CEO

LEADING WITH RESPONSABILITY

GRI 102-14

The Cargolux Group is committed to corporate social responsibility. We strive to always do our best in this important area of business, and we encourage and support suppliers who follow CSR principles. While most organizations are coming to understand and respect the need for environmental and socially responsible measures, we need more than respect. We need deep and abiding accountability.

Here, at Cargolux, we have been committed to tangible action and reporting against our CSR’s Key Performance Indicators, since 2008. This CSR report provides details of our work in sustainability and social responsibility over the past year, and of ongoing programs that are fundamental to making a difference for our company, the community, and the environment.

Central to our Cargolux 2025 strategy are 3 pillars: Strategic Measures, Business Process Review and the Digital Roadmap. These goals are reflected in virtually all activities we undertake, especially within the context of CSR. Ultimately, our main responsibility is to ensure the continuity and sustainability (financial, environmental and social) of the organization.

Among our CSR successes this year are progress in noise abatement, reducing fuel consumption, pilot support and development, automation and digitalization, and improved collaboration.

I am thankful and appreciative of all of our employees who show such confidence and pride in our organization and who are also confident of their abilities and committed to influencing the future. I am proud and grateful to be associated with a team that puts energy and enthusiasm into caring for the environment as well as our financial sus­tainability. I applaud the many people in Cargolux who are mobilized around CSR principles, and the Sustainable Development Goals. Every day we see that positive environmental and social measures are good for us, good for our customers and, indeed, good for our business.

In a world of increasingly complex logistics requirements, Cargolux Airlines International S.A. has established itself as a leading provider of reliable, high-quality air cargo services, and the Global Cargo Carrier of Choice.
Starting with only a handful of CL-44 aircraft, the company has developed into Europe’s largest all-cargo airline, operating a steadily expanding fleet of efficient, purpose-built Boeing 747-8 and 747-400 freighters.

Cargolux was the world’s first operator of both aircraft types and uses its modern fleet and a number of trucking contractors to move valuable and time-sensitive commodities on its worldwide network that covers some 90 destinations with more than 85 offices in over 50 countries.

Cargolux Italia is Cargolux’s affiliate airline based in Milan, Italy. In 2016, it was Italy’s largest all-cargo carrier with a market share of 14.5%. Meanwhile, Cargolux has established a second hub in Zhengzhou, China, that complements the group’s home base in Luxembourg. Cargolux today is considered the indisputable air freight specialist to China, with daily flights to Zhengzhou, Shanghai and Hong Kong. All in all, the company offers more than 80 weekly connections between Europe and China.

Five weekly transpacific flights connect Zhengzhou with Chicago and Atlanta. With these, Cargolux operates 15 weekly direct transpacific connections from mainland China, Hong Kong, Japan, Singapore and Malaysia to key gateways in the United States, making Cargolux one of the few cargo carriers operating transpacific routes with the advantage of nose-door equipped 747 freighters.

Spreading its wings for a global reach underlines Cargolux’s vision and supports its strategy to grow from a single hub in Luxembourg to multiple gateways in Milan, Zhengzhou, Hong Kong and Chicago.

In more than 45 years of operations, Cargolux has become an expert in handling a variety of delicate types of shipments. Live animals, perishables, temperature-sensitive shipments and outsize freight benefit from the experienced Cargolux touch. The airline offers an extensive product portfolio that gives customers expert treatment for even the most unusual requirements.
With this portfolio, Cargolux continues to build on its existing core competency, pushing global consistency and leveraging the evolution of its global presence. The airline’s focus is industry-specific needs – it thinks beyond the flight and responds to customers’ door-to-door requirements.

Cargolux’s flexible charter services offer the advantage of guaranteed capacity availability.
The airline operates a number of dedicated charter aircraft that can be deployed at very short notice. With staff stationed across the globe, Cargolux Charter gives customers 24/7 coverage.

The company’s maintenance center in Luxembourg also offers third-party maintenance services, specializing in Boeing 747 line and hangar maintenance up to and including C-Checks.

Its service offering includes a range of specialized maintenance services such as, but not limited to, avionic modifications, structural repairs and worldwide AOG support.

Cargolux is firmly committed to ensuring full compliance with all applicable laws and regulations, as well as adherence to internal rules and policies. The airline is convinced that ethical corporate and individual behavior is a precondition for sustainable and profitable business relationships, fostering trust and avoiding the risk of reputational or other damage.

Prevention is rooted in the Cargolux Ethics Code and Policies that form the company’s constitutional documents, and which are updated regularly as per business requirements and regulatory changes. They summarize the principles that guide the Cargolux staff in doing business. Good, sustainable business is always driven by values and The Cargolux Spirit outlines the 8 core principles that drive our business and relationships.

The Enterprise Risk Management (ERM) program was further developed in 2017. Following a stringent methodology, the top 10 strategic risks, as seen by senior management, were documented. These risks, along with major process-inherent risks, were used as a basis by Internal Audit for the 2017 risk-based Audit Plan.

The purpose of Internal Audit is to provide independent, objective assurance and consulting services that are guided by a philosophy to add value and improve Cargolux’s operations. It assists Cargolux in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the organization’s risk management, control, governance and certain other processes related to the design and operation of internal controls.

Cargolux takes its commitment to the business environment and industry seriously. Integral to the development of industry-wide solutions are partnerships and development.

Cluster for Logistics: Cargolux is a founder and Board Member of the Cluster for Logistics. This community seeks to promote Luxembourg as a logistics hub and gathers logistics service providers, research institutes and other organizations to build competencies and to continuously optimize activities, to benefit the customer.

UN Global Compact: Cargolux is committed to operating and acting in a socially and environmentally responsible manner. The company committed to the UN Global Compact in 2007, pledging to apply its 10 key principles, and actively supports the Sustainable Development Goals (SDGs), which came into effect in 2016.

IATA: The International Air Transport Association (IATA) is the trade association for the world’s airlines. It represents approximately 265 airlines or 83% of all air traffic. As well as supporting many areas of aviation activity, it helps to guide and formulate industry policy on critical aviation issues.

Cargo iQ: Formerly the Cargo 2000 initiative, this IATA interest group aims to improve work processes in the air cargo transportation industry from shipper-to-consignee (end-to-end).

TIACA: The International Air Cargo Association (TIACA) represents, supports, informs, and connects every element of the global air freight supply chain. This organization provides a unifying voice for the industry, works for global standards, and raises the profile of air cargo.

Airlines for Europe (A4E): Cargolux joined A4E in 2016. Based in Brussels, A4E is Europe’s largest airline association. It represents the interests of airline members, and their customers, in various policy areas, including European air traffic management framework reform, aviation emissions trading schemes, security issues and aviation taxes.

SAFUG: Cargolux is a founding member of the Sustainable Aviation Fuel Users Group (SAFUG), a cross-industry initiative aimed at promoting and bringing to market sustainable aviation biofuels.

Safety Management Best Practices: Several of the Cargolux Aviation Safety Department members are involved in external safety groups and contribute to generating industry best practices that can then be implemented within Cargolux. These groups include amongst others, EASA CAT-CAT (Civil Aviation Collaborative Analysis Group), the IATA Safety Group, the IATA Hazard Identification Task Force, and the EASA European Operators Flight Data Monitoring Initiative.

Cargolux believes strongly in service excellence. Personal contact and detailed attention to customer need is the foundation for a successful business and is built on cooperation and trust. With its activities, the airline seeks to boost the corporate and economic success of its partners. This has earned Cargolux a high level of trust and loyalty from its customers and partners in the industry. Many of these long-lasting partnerships have grown over decades, and Cargolux is proud that its efforts are recognized with the many industry awards it receives. Among the awards that Cargolux received in 2017 were:

STAT Times’ International Award for Excellence:All Cargo Carrier of the Year, February 2017: Cargolux was selected for the 4th year running. This award recognizes customer dedication and the extensive Cargolux network in Africa. The company has a long-standing history and enjoys the continued loyalty and support of forwarders and shippers in this market. Cargolux is acknowledged as an expert in a range of diverse shipments, from perishables, fruit and flowers, to heavy machinery for the oil and gas industry.

Best All-Cargo Airline, April 2017: Cargolux again received the prestigious Best All-Cargo Airline award from the British trade magazine Air Cargo News. Cargolux was honored for its high-quality, first-class service and expertise provided to customers worldwide. An important element is Cargolux’s close personal contact with, and attention to, its partners. Votes were cast by the international readers of Air Cargo News.

Best Green Airline (Asian Freight, Logistics and Supply Chain [AFLAS]), June 2017: Cargolux was recognized as a leading service provider committed to environmental awareness. Environmental awareness is an integral part of Cargolux’s corporate culture. More than 15,000 readers of Asia Cargo News and e-news subscribers vote for this award.

Best Freighter Operator (Freighters World), September 2017: Cargolux was named Best Freighter Operator by Freighters World. Cargolux provided evidence of new products and routes, customer engagement, industry innovation through its alliance with Emirates SkyCargo, and investment in freighter aircraft. Winning this highly competitive category shows the market’s recognition of Cargolux’s unwavering commitment to quality, and their appreciation for its dedicated staff’s performance.

Lean and Green: The LEAN and GREEN award was started by the Dutch Ministry for Infrastructure and Environment in 2008. This international initiative recognizes efforts to reduce carbon footprint (CO2 emissions) in aviation logistics’ by at least 10 percent in 5 years.

Today, Lean & Green Europe is the leading community for sustainable logistics in the EU. Lean & Green Europe combines corporate responsibility for reducing footprint with continuous improvement of operational performance and value for customers. It encourages businesses and governmental bodies to move to a higher level of sustainability by taking measures that yield cost savings and reduce environmental burden.

This Lean & Green Europe award recognizes Cargolux for successfully facing the challenge of finding a healthy balance between environmental and economic concerns. The airline’s customers, logistics partners, and major forwarders of this world, are well aware of the Lean & Green program and appreciate Cargolux’s efforts. Being Lean & Green certainly gives Cargolux a competitive advantage and underlines its commitment to always deliver the highest service excellence.

ECOVADIS: Cargolux continues to hold Ecovadis’ Gold Rating status that was awarded in 2016. Ecovadis provides a solution for monitoring sustainability in global supply chains; Cargolux is one of the companies audited by Ecovadis. The audit produces a reliable assessment of the airline’s corporate social responsibility performance through comprehensive feedback, benchmarks and tools. Its methodology is based on sustainable development standards of the Global Reporting Initiative GRI, the United Nations Global Compact and ISO 26000.

German Design Award: A development in October 2017 for Charlie Victor, the company’s corporate magazine, was winning a special mention award for 2018 2. The magazine was cited as a shining example of ‘a new way of communicating both externally and internally’. This award was a welcome recognition of the innovative Cargolux communication program which showcases the added value of its services and the excellence of its outstanding staff. The Jury statement included…

“ This contemporary design adroitly deploys elements from the air-freight industry, and in so doing underscores the publication’s interesting and exciting content. An impeccably and convincingly executed publication that conveys all the excitement of flying. ”

International Creative Media Award 3:
The magazine was also rewarded by the International Creative Media Award (ICMA), which is a global competition for corporate media, books, corporate design and magazines. It honours quality, creativity and design in publishing. For the 2017 competition, a total of 376 publications from 27 countries were submitted to the jury. Cargolux publishes its customer and staff magazine three times a year. It provides the latest news about people, processes, and technology that make Cargolux a leading player among the world’s top air cargo carriers. Each issue also features a detailed photo spread of a selected destination
from the airline’s global network.

Getting two awards within four issues is no mean feat and with this second, prestigious award,
Charlie Victor is now firmly placed among the premier corporate publications of 2017. All issues of Charlie Victor, The Cargolux Magazine, are available online: http://www.cargolux.com/media-room/publications/our-publications. Cargolux extends its thanks to the agency responsible for Charlie Victor, Maison Moderne, for its positive cooperation!

Certificates & Certification

In addition to the above awards, Cargolux is in the top 5 of IATA’s world-wide all-cargo airline ranking for fuel efficient carriers.

Innovative concepts, and the constant drive for quality, ensure that Cargolux is always focused
on developing and improving its business. Certi­fication is an important element of any endeavor in this industry, and Cargolux prides itself on its achievements in this area.

GDP Certification: Cargolux was the first airline worldwide to receive the Good Distribution Practice (GDP) certification that attests that Cargolux’s management system meets the requirements of the World Health Organization guidelines and the EU directive ‘Guidelines on Good Distribution Practice of Medical Products for Human Use’. Reflecting this expertise in its CV Pharma product, one of eight specialized offerings in its product portfolio, makes Cargolux a preferred carrier for the transport of pharmaceutical goods, and underlines the company’s commitment to the safe and fast movement of high-value, temperature-sensitive, healthcare shipments across its global network.

IATA Operational Safety Audit (IOSA): Cargolux Airlines International S.A. passed its sixth IOSA audit in 2017, with exceptionally good results.
The IATA Operational Safety Audit (IOSA) program is an internationally recognized system designed to assess the operational management and control systems of an airline. It evaluates about 900 different standards. The exceptional result achieved by Cargolux is due, in part, to IOSA audit parameters being used in the affected systems and processes, thus providing guidance to teams, ongoing and accurate assessment of every impacted division.

As a member of IATA, Cargolux, like any other IATA member airline, must pass an initial IOSA audit and subsequent renewal audits every two years. Not only does this ensure a constant enhancement of aviation safety, it is recognized by insurers and a number of aviation authorities, such as the FAA, across the world. Cargolux passed its initial audit in 2007 and its long-term commitment to the IOSA registry underlines the airline’s strong commitment to the safety of its operations, and its constant push for high safety standards within the airline industry.

OHSAS 18001 Certification for Health & Safety: This international certification provides evidence that the organization has a framework in place to identify, control and decrease workplace health and safety risks. Cargolux adheres to a rigorous health and safety policy which protects staff against possible occupational risks and also reduces the likelihood of accidents. Cargolux believes in proactively identifying health and safety risks and conforming to all local and international health and safety regulations.

ISO 14001 Certification: The ISO 14000 certification confirms that Cargolux follows practical standards for managing its environmental systems and responsibilities. It includes specific tools and approaches (e.g., audits, communications, labelling and life cycle analysis) to address environmental challenges such as climate change.

Cargolux uses the following pillars to organize its business and interaction with customers and industry leaders.

PROGRESS IN 2017

Cargolux is seeing a growing commitment for environmental and social awareness among its staff, its customers, and the industry. In 2017, Cargolux reviewed the CSR program in order to align the strategy and initiatives to the expectations of its stakeholders and the requirements for the sustainable future of the company.

A cross-divisional CSR committee jointly worked on a CSR strategy that incorporates and continues to contribute positively to existing programs and actions the company is taking: the quality of these programs has been recognized by authorities and organizations alike as shown by awards such as Lean & Green, or local labels, such as ‘Superdreckskescht fir Betrieber’. Cargolux strives to continuously expand its engagement towards the environment, its neighbors and the people whose livelihood rely on the economic success of the company.

For this reason, the company has committed to embracing the UN Global Compact 2030 agenda and has structured the CSR report in line with the SDGs.

It is sometimes difficult to be on the vanguard of a movement, but with almost a decade of CSR reporting under our belts, Cargolux’s commitment to social responsibility continues to grow every year. From the initial steps of creating awareness, and building engagement in pockets throughout the organization, we have become a triple-bottom-line culture (social, environmental and financial); embracing our role to develop and demonstrate tangible evidence that ‘good for the environment’ can be good for business… And that good for the community can be good for the company.

I am thankful for the support that our CSR program enjoys throughout the organization. From top mana­gement to the front lines, our people are talking about sustainability and responsibility.
I am grateful for such innovative and enthusiastic team spirit, that buoys our efforts to always strive to be better, cleaner, faster, quieter.

For any complex subject, one of the main challenges is extracting and highlighting the essential elements to paint the details of our success story. This year, we hope that this new CSR format accomplishes that task. As well as addressing the Global Reporting Initiative (GRI) standards, it encompasses our commitment to the 2016 United Nation’s Social Development Goals (SDGs). It describes not only the company’s CSR endeavors, but also gives a view of some of the individuals who are making it happen. We hope that these pages illustrate the excitement we feel about our commitment to corporate social responsibility and translate the actions we are taking each day, into words that tell our story.

Cargolux’s CSR program focuses on four areas of priority for its business. Each area is driven by specific commitments, goals and targets that involve all stakeholders within the company. The CSR program supports the company’s vision as the Global Cargo Carrier of Choice. Here are some of the 2017 achievements:

Pilot Support & Development: In 2017, Cargolux continued to roll out this important program that provides peer-to-peer support and guides pilots as they accumulate skill and knowledge to move forward in their careers.

Fatigue prevention: Safety is a significant pillar for Cargolux and a primary focus within all its activities. This year, we continued to refine the pilot fatigue prevention models and parameters.

Collaborative Culture: Connecting Flights, Just Culture and Brainwaves, are just a few ways that we are supporting trust-building, innovation, employee engagement, collaboration and transparency within the company.

Female pilots and apprentices: Cargolux prides itself on the balanced and welcoming company environment. Each year, it concentrates on ensuring that no matter the gender, ethnicity, or religious beliefs of an employee they are accepted and respected. The airline also believes that visible demonstration of our foundational principles is important. Cargolux employs staff from 70 different countries throughout the network. It is building towards gender inclusiveness in job categories that are normally male-dominated, such as flight crew and aircraft maintenance.

Innovation: Drone inspections, big data utilization, and digitization are all happening at Cargolux as it moves with excitement toward the future. Using squAIR-timber will also bring us closer to a sustainable and CO2 neutral position.

Climate: Portable electronic flight bags, e-booking, a new trucking management system and paperless processes are all contributing to reducing any dependency on paper and/or heavy processes that cause waste. These projects are also helping Cargolux get closer to the customer and focus on its primary activities. The replacement of high-pressure Halogen (HQI) light fixtures in the hangar with LED lights resulted in energy savings and allowed the airline to take advantage of new technology in the field.

Caring Cargolux: Noise abatement programs such as APU off, Active Quiet Climb, Three Engine Taxi, and Constant Descent Approach are all projects that are succeeding… and making a difference for the communities around the Luxembourg hub.

Stakeholders play an important role in Cargolux’s activities and affect the company’s business in many ways. Cargolux’s stakeholders include shareholders, employees, customers, financial institutions, and suppliers. They extend to the communities potentially affected by the company’s activities, primarily those around the airport of Luxembourg; its main operational hub.
Finally, they also include government and local authorities, national and industrial representations, non-governmental organizations, and auditing bodies. Cargolux employs various means to interact and maintain transparency with its stakeholders, provide updates, developments, and to foster open dialogue which enables opinion and suggestion gathering.

Externally: Cargolux continues to improve its communication vehicles; direct dialogue, written feedback, direct representation, events, the company website, social media platforms, customer magazine and media were all leveraged. Representatives of the company also participate in working groups in a range of areas, the purpose of which is to effect industry improvements and/or define benchmarks. Cargolux staff also attended conferences to increase and/or maintain its market visibility. Individual team members presented ground-breaking Cargolux initiatives such as Pilot Peer Support & Development.

Internally: emphasis was put on idea exchange, and dialogue with internal stakeholders. The Intranet, staff newsletters, mailings, company events, workshops and a variety of ongoing programs such as the Connecting Flights program, which focuses on enhancing understanding of the Cargolux key values and improving communication between management and staff to inspire a more congruent corporate culture. Various employee surveys were conducted to better understand the staff’s view on internal programs and initiatives, (eg, Compliance and Corporate Training) in order to be able to better adapt such programs to the needs of the organization.

The company’s CSR program was developed over the last couple of years, in line with the development of its business and with input from stakeholders. However, the identification and prioritization of key CSR issues remains an ongoing process that continuously evolves and provides a growing platform for stakeholder consultations.

With a focus on continuous improvement, Cargolux launched a 2017-2020 Stakeholder Engagement program.

The airfreight industry has fought a myriad of challenges and difficult conditions for a number of years. It is an increasingly difficult environment for maintaining a financially sustainable operation that also respects the demands and needs of its stakeholders. Yet, despite the challenges, Cargolux has been eager to uphold its commitment to Corporate Social Responsibility.

Cargolux 2017-2020 Stakeholder Engagement Program

GRI 102- 42, GRI 102-43, GRI 102-44, GRI 102-46, GRI 102-47

In September 2017, Cargolux launched a materiality assessment in collaboration with CCD Partners, GRI Certified Training Partner Luxembourg, to identify and prioritize material aspects and topics based on stakeholder expectations.
The analysis resulted in the identification of 11 material topics within Cargolux’s economic, environmental and societal context.

Cargolux believes that this focused list of material topics, linked to the United Nations Sustainable Development Goals, and combined with increased attention from senior leadership, will allow Cargolux’s CSR team to further develop the CSR strategy; creating value for Cargolux and its stakeholders in the coming years. The following steps detail the methodology and process for 2017 Stakeholder Engagement Program:

STEP 1

Develop an exhaustive list of issues

In this spirit, the materiality assessment started with in-depth desktop research on current market trends using a sector-specific benchmark analysis. The analysis was carried out using the applicable GRI sector supplement, as well as reports of B2C companies displaying high maturity in terms of CSR reporting and performance. The benchmark analysis resulted in a total of 42 topics distributed as follows: 7 economic topics, 13 environmental topics and 21 social topics.

STEP 2

Internal materiality assessment workshops, organized around the domains of Economy, Environment and Society took place in October 2017 and brought together subject matter experts from the various Cargolux operational areas.
In total, 13 contributors took part in at least one workshop each including Human Resources & OHS, Compliance, Maintenance & Engineering, Environmental Management, Procurement, Flight Operations, Corporate Finance, Strategy & Development, Sales & Marketing, Global Logistics and Corporate Communications.

The above-mentioned 42 topics were prioritized according to their level of impact, occurrence, and the control that Cargolux exerts. An initial list of material topics emerged from these workshops.

STEP 3

Map internal and external stakeholders

After completing the thematic workshops involving a sample of internal stakeholders, Cargolux mapped both internal and external stakeholders which would gradually engage in the materiality analysis. The stakeholder mapping workshop resulted in a list of 19 stakeholder groups, prioritized according to their level of dependence on, and influence exerted upon Cargolux.

Based on this process and using output from the thematic workshops, the following materiality was established.

The way ahead: United Nations Sustainable Development Goals (SDGs)

Following international trends, Cargolux also took first steps towards mapping and reporting on its contribution to the SDGs. Based upon information gathered at the thematic workshops, 6 priority SDGs were selected where the airline will concentrate its efforts and reporting.

To ensure a gradual and comprehensive internal and external stakeholder engagement, the Stakeholder Engagement Program plan will be executed from 2018 to 2020. Cargolux expects that increasing stakeholder engagement will allow it to identify and anticipate future sustainability risks and opportunities, and respond to stakeholder expectations more effectively.

STAKEHOLDER MAPPING

Our Safety Management procedures allow for quick identification of safety issues and support the organization operating in a safe way. During 2017, Safety Promotion initiatives resulted in an increased awareness regarding risk management. This development helps the organization to further identify safety issues before they become a problem. Safety is becoming our Philosophy, not a Duty!

Cargolux maintains a Safety Management System (SMS) that is approved following regulations issued by the European Aviation Safety Agency (EASA) requirements using the guidelines and recommendations set by the International Civil Aviation Organization (ICAO). The SMS embraces Flight Operations, Maintenance and Engineering, Design Organization, Flight Crew Training (ATO & FSTD), Maintenance Training (MTO) and Ground Operations Divisions. All safety and risk management processes are documented in the Cargolux Management System Manual and are mandatory for all operational stakeholders.
The Safety Management System is approved by the Luxembourg Civil Aviation Authority (DAC).

The SMS is overseen by a dedicated team of investigators, analysts, risk management and safety experts, who directly report to the accountable manager. Additionally, safety critical issues are quickly addressed through direct communication between the aviation safety department and the responsible process owners. The SMS includes proactive and reactive safety reporting, flight data monitoring, hazard identification, risk management and management of change procedures.
These and other elements are used to identify and mitigate potential safety-related issues, thus keeping risks as low as reasonably possible and within acceptable levels.

The Cargolux Safety Review Board (SRB), the airline’s highest governance body for safety-related issues, is comprised of all nominated persons 4, as required by EASA. This board regularly meets to analyze and advance the operational safety performance of Cargolux. A number of safety performance indicators measure the effectiveness of safety barriers and are regularly presented to the process owners, as well as the SRB, who collaborate to analyze potential problem areas and to take pro-active risk control action.

Safety reports submitted via the SMS in 2017, included Air, Maintenance, Ground Safety, and Fatigue Reports. The increase in reports is a positive illustration of growing awareness in staff of safety issues, and the importance of safety reporting. A steadily increasing rate of proactive reports has allowed Cargolux to take actions before hazards become events.

Flight Safety: The Cargolux Safety Culture is open and transparent. Frequent and regular communication is conducted, safety reports and related investigation findings are distributed widely and used to increase awareness regarding risks and hazards.

Identified risks and hazards are also used to update Flight Training to reflect any new developments or insights. Data from the Flight Data Monitoring System is used to develop scenarios and identify ‘hot topics’ that are added to the training content. The annual training program is updated bi-annually to ensure it is timely and current.

4 The operator must have nominated persons, acceptable to the Authority, who are responsible for the management and supervision of Flight Operations; the Maintenance System; Crew Training; and Ground Operations.

Cargolux has had a strong, comprehensive compliance program in place since 2010.
It safeguards the company’s business environment and assets, and protects its employees by giving them the tools to better identify and address ethical challenges. The program involves all divisions of Cargolux worldwide and is actively supported by company management.
It is based on a set of well-thought-through policies, conduct guidelines, and is supplemented by regularly scheduled training, communication initiatives and a compliance management system, including a consultation desk function.

All employees and representatives of Cargolux are committed to following external laws and regulations, as well as the airline’s internal policies, ethics codes and other guidelines that enable doing business in a fair, ethical and legal manner.

At Cargolux, the business faces exposure in several risk areas such as antitrust, anti-bribery, fraud and export restrictions. With the overall aim of protecting the company and staff from financial penalties, legal exposure, and reputational risk; the Compliance Department provides support and guidance to help navigate these hazards and provides proactive advice to prevent the occurrence of risky events. The department’s functions are divided into three key areas; prevent, detect, and act (see diagram above). But, the primary focus is to help Cargolux staff fulfill their compliance responsibility. Compliance is everyone’s responsibility.

The Cargolux compliance training program incorporates online and classroom sessions, with refresher training at regular intervals within a 3-year cycle. It provides an overview of the company’s legal obligations, values and ethical principles, to all employees, sales agents and legal representatives. Topics include anti-bribery, competition law, conflict of interest, corruption, data protection and more.

Supporting Peace through Export Control: Comprehensive procedures, as well as manual and electronic control systems, ensure full compliance with restrictions and embargoes on specific countries, entities, and commodities. Targeted training communicates special procedures for shipping goods subject to export control measures and ensures that Cargolux staff and the airline in general, do not violate any regulations.

Confidential Reporting: Cargolux has a specialized, independent external organization to run its confidential reporting system.
This enables individuals to report potential misconduct in complete confidence and helps Cargolux to uncover potential breaches of laws, internal rules, or procedures, and to prevent reoccurrence. Closer to the daily business, the company’s internal Compliance Consultation Desk, accurately and quickly responds to employees’ questions regarding applicable rules and their interpretation. Since its launch, it has seen continuous growth in the number of questions submitted. This demonstrates employees’ increasing awareness regarding compliance risks.

Risk Analysis: Cargolux is headquartered in a country with very high standards with respect to observing human rights. Human rights issues therefore play a minor role in the company’s daily business at its home base. However, Cargolux’s service level agreements require that its partners and suppliers also comply with its values and ethics and observe human rights in their business activities. Cargolux deals with a wide variety of business partners and suppliers worldwide. To ensure that these companies comply with business ethics and principles, the company performs due diligence on partners classified as medium and high risk. This risk classification is country-specific, according to a corruption perception index, and is also based on the type of services rendered.

For Cargolux to be successful, we must do everything in our power to know our business partners, compete fairly, and protect our assets. Our focus is to give everyone in the company the tools and knowledge they need to be effective in their job while being in compliance with regulations and standards.

SEE ALSO

In July 2017, the government outlined its 2030 Agenda5, and 4 specific challenges relevant to Luxembourg. These include: large and rapid population growth, diversity in local working population, the economy’s over-dependence upon the financial sector, and environmental and climate pressures. This 2030 Agenda, and these challenges, also align with the UN’s 17 Sustainable Development Goals (SDGs).

Cargolux, along with a handful of other companies in Luxembourg, has embraced the 2030 Agenda and pledged its support to the UN’s 17 Sustainable Development Goals. In order to focus on areas where Cargolux can affect change, the company has chosen to take action in the following 7 goals.

The format of this CSR report allows the showcasing of the 7 priority SDGs that are closest to Cargolux’s heart, highlighting projects and initiatives which pertain to any SDG, to precisely identify their impact.

CARGOLUX’S COMMITMENT TO THE SUSTAINABLE DEVELOPMENT GOALS

This section provides an overview of Cargolux initiatives which relate to the Sustainable Development Goals and align with Luxembourg’s 2030 Agenda.

SDG#1: END POVERTY IN ALL ITS FORMS EVERYWHERE

Cargolux is grateful and appreciative that it has found a supportive and encouraging business en­vironment in its home country, Luxembourg.
The company recognizes that organizations in different countries in its extensive global network, have different challenges. Cargolux is committed to joining the fight against poverty in ways that acknowledge and respect local partners and cultures.

FOC (Free of Charge) shipments: Cargolux puts effort into making space available for humanitarian causes by supporting NGOs bringing relief aid and medical goods to people affected by epidemics and natural disasters. Throughout the year, the company supported a number of NGOs and initiatives to endorse charity project for people in need. Sponsored transports included some charity shipments to support projects in Africa, and for the International Bazaar Luxembourg, (US, Hungarian, South African and Thai stands). Cargolux continues its long-standing support of the International Bazaar, one of Luxembourg’s major annual charity events that brings together volunteers from over 50 nations to sell specialties from their home countries. The proceeds from these sales are distributed among a wide number of aid and relief projects large and small, throughout the world.

Charity and social support are not only part of the company’s values, but also close to its employees’ hearts. In 2017, the Cargolux staff sports clubs supported the ‘Fondation Hellef fir Kriibskrank Kanner’, a local organization that supports children suffering from cancer or other life-threatening diseases and their families. In addition, a group of employees participated in a variety of charity sport events, for example, after work swimming organized by the International Section of the Luxembourg Red Cross, and the Giant Public Pillow Fight organized in support of patients fighting Parkison’s disease.

Charity, social support and sponsorship are also high on the company’s and employees’ agenda. Whether Cargolux is hiring technical helpers from ADEM, participating in a business run, sponsoring drinks at a local golf tournament, or collecting plastic bottle caps to raise funds that support guide dog programs, Cargolux and its staff are active throughout the year. Here are a few of the 2017 endorsements.

Fondation Hellef fir kriibskrank Kanner; a local organization that supports children suffering from cancer, or other life-threatening diseases, and their families.

Rock Against Cancer: a music event that supports Fondation Cancer Luxembourg and Fondatioun Kriibskrank Kanner in the fight against cancer.

Omega 90: is a charity that provides palliative care for terminally ill patients. Its aim is to improve quality of life for patients and for their families, through kind and gentle treatment and prevention of suffering, whether physical, emotional, mental or spiritual.

Charity shipments: Throughout the year the company supported a number of NGOs and initiatives to sustain charity projects for people in need. Sponsored transports included shipments for the US, Hungarian, South African and Thailand stands at the International Bazaar Luxembourg.

SDG#3: ENSURE HEALTHY LIVES AND PROMOTE WELL-BEING FOR ALL AT ALL AGES

GRI 403-1, GRI 403-2, GRI 403-4

This SDG encompasses initiatives aimed at ensu­ring that Cargolux personnel are comfortable and healthy at work and in their day-to-day lives. Promoting good health and well-being is of critical importance to Cargolux. The airline recognizes that the level of team-work and collaboration enjoyed throughout the organization is energizing, but also challenging for staff in this very competitive environment. In the 2017 reporting year, the Cargolux team went above and beyond to meet requirements that included a steady stream of customer requests and business.
The company’s commitment is to provide as much support and as many systems as is reasonably possible to ensure a healthy and satisfying work environment.

Cargolux tracks types and rates of injury, occupational diseases, lost days, absenteeism, and the number of work-related fatalities.
It is fortunate, in Luxembourg, to have as a foundation, a very high standard of national health care. To complement this, Cargolux OHS department also provides information and recommendations on road safety, an international vaccination program, and an influenza vaccination campaign for all employees based at the HQ.

Throughout the year, Cargolux provides services that impact the health and well-being of its staff. The company promotes proactive dialogue and positive behaviour in key areas that affect well-being and health. Initiatives include: changing the in-flight caterer to ensure proper quantities and healthier meal choices; the provision of state-of-the-art equipment and machinery as well as personal protective equipment to appropriate staff / areas; and, new locker rooms and shower facilities for M&E staff. SOS International services provides traveling Cargolux employees with a mixture of technical and on-the-ground sources to keep staff safe 7 days/week and 24 hours/day (24/7), virtually anywhere in the world.

Through SOS international support, CV staff traveling to countries affected by sudden security concerns get immediate access to real-time information on developing situations and guidance on how to react appropriately to any security issue. As the airline operates in a large number of countries that are affected by a variety of diseases (eg, Zika, Malaria, Yellow Fever, etc.) the company offers a vaccination program to employees based at Headquarters and maintains a monitoring and information program on outbreaks throughout the world.

Management recognizes the importance of sport and fitness to balance stress. Sports groups provide a platform for cardiac and other forms of physical health as well foster team spirit; a positive contributor to emotional/mental health. Cargolux supports 12 different sports clubs run by employees. The company regularly supports and sponsors Cargolux teams to raise funds for charity.

Whether it be through personal interaction, fatigue or job-related circumstances, pilots, like professionals in other fields, are regularly subject to stress. Peer-to-Peer Support and Pilot Development Programs provide support to pilots and foster development at every stage of their career. These programs form the cornerstones that ensure Cargolux pilots are ready, able, and confident. Peer support is an important, and integral element to support ongoing pilot mental health. Cargolux has partnered with Stiftung Mayday to ensure that trained peers are equipped to provide advice and counsel to pilots undergoing critical temporary conditions. The Pilot Development Programs focus on personal development and growth throughout a pilot’s career from First Officer to Captain. The programs focus on the needs and requirements of pilots in respect to their level of experience and their seniority within Cargolux. The Pilot Development Programs; Pilot Initial Guidance & Support, First Officer, and Captain Development Programs, form the other three cornerstones of this joint, pilot support and development approach. This program aligns with European Aviation Safety Agency (EASA) recommendations.

The most important duty for me, as a Human Factors Manager, is to offer support to our pilots, throughout their career – from their first steps as Junior First Officer up to the level of a highly qualified and experienced Captain. From a human factors perspective, the establishment of Peer-to-Peer Support and the integration of Pilot Development Programs are core initiatives for a well-protected career as an esteemed colleague at Cargolux.

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Safety is the highest priority for Cargolux and its commitment to a safety culture remains as high as always. The airline takes a long-term view of its business and its reputation, and knows that both are contingent on the safety of teams and assets. In this high-risk, ultra-safe industry, Cargolux uses both a top-to-bottom and bottom-up approach to engage the whole organization in managing risk.

Safe Workplace: Work plays a central role in people’s lives as they spend a large part of each day in the workplace. Recognizing this, Cargolux believes that a work environment should be safe and healthy, where its employees feel comfortable and protected during their workday, as well as inspiring and conducive to creativity. The Cargolux Occupational Health & Safety (OHS) Department promotes health and safety awareness using a variety of systems and tools such as a dedicated intranet site to promote safety practices. Aimed at creating a system of continuous improvement, this site shares information and promotes prevention. In an ongoing campaign, OHS runs a sensitivity program aimed specifically at staff working in high-risk areas ensuring, with their on site presence, a clear understanding of Safety Operating Procedures (SOPs).

Health & Safety: Cargolux strives to provide its employees with a safe and healthy workplace.
The company offers an environment where its employees feel comfortable and protected during their daily work. To this end, Cargolux has in place an effective health and safety management system that is aligned to the CWA (Collective Work Agreement) and includes formal joint management-employee health and safety committees. Cargolux holds an OHSAS 18001 certification for its Health & Safety Department. As well, in 2017, the department welcomed a delegation from the European Commission that was interested in understanding how Cargolux is applying EU regulations, especially in risk areas.

Security Intelligence & Analysis Service (SIAS):
In alignment with the company’s Mission, SIAS’s goal is to ensure that Cargolux people, stakeholders, and assets, operate in a safe environment. SIAS provides Cargolux Corporate Security with protective and strategic intelligence capabilities 24/7. In a very dynamic security environment, this support enables the department to produce quick and confident security risk assessments based on the latest information.

Our daily goal is to ensure that no employee is performing a job which could be considered unsafe or unhealthy. The Health and Safety of each employee is the overriding priority of our organization. We are continuously improving our SOPs, involving our employees in every single step of this development.

Cargolux focuses on attracting and securing a motivated and highly qualified workforce that can address current activity requirements and future needs. The airline puts strong emphasis on supporting future professionals and participates in a range of initiatives annually that include school visits, internship programs, and events, that give youths the chance to gain personal impressions of daily work requirements in the air freight industry, first-hand information about career opportunities, explore job opportunities and possible career paths.

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Human Resources (Corporate Training) is dedicated to ensuring all Cargolux personnel meet their full potential. The department offers a variety of programs that enhance team spirit and individual growth.

Cargolux is interested in knowing its people; what motivates them, what makes them unique, and how to optimize the fit between organizational needs and individual career aspirations. The company knows that when people are happy with what they do, they are able to tap their full potential and perform at their best. In this way, training and development supports business continuity and increases individual job satisfaction. Corporate Training constitutes one of four major pilars in Cargolux’s training activities, next to Flight Training, Maintenance & Engineering Training and Ground Ops Training. Training services are not only provided to employees but are also open to contractors in developing countries.

The philosophy for corporate training

Continuous learning and development are central to Cargolux’s philosophy. The company has a strong focus on teaching and learning at all levels in the organization. The aim is to retain and develop talented individuals, and to develop skills and capabilities for Cargolux’s future success.

Developing people

The aviation industry demands high standards of expertise, training, development and regulatory compliance. Cargolux staff are highly skilled, experienced professionals, who follow an extensive program of mandatory and regulatory training to maintain and upgrade their licenses, technical skills, and competencies. The company offers a variety of mandatory training and personal development opportunities that go far beyond these regulatory and mandatory requirements.

Within this framework, employees have access to a variety of soft skills training on subjects such as time management, conflict management and presentation skills. On-the-job training also plays an important role in building specialized skills. Knowledge and expertise is grown from direct experience gained from working beside talented colleagues.

In line with the philosophy of continuous learning, employees are encouraged to work towards relevant degrees or other professional qualifications.

Developing the leaders

Cargolux is continuing to engage and invest in the growth of leadership capabilities. The company has a well-established team leader and management development program.

The reporting year has seen the development and implementation of an orientation program for new managers. In partnership with an external training provider, Cargolux has also initiated an Executive Leadership Development Program. The program provides a platform for senior and future leaders to develop their leadership capabilities in line with the organizational vision and corporate strategy.

Performance management and succession planning

Cargolux recognizes that its future success depends on a dedicated and talented team. To safeguard internal knowledge and skills, and to ensure ongoing operational activity, a succession planning framework was implemented. This aligns with Cargolux’s commitment to career development for all employees in the company’s global network, and a structured appraisal framework for all managers.

Developing learning approaches and capabilities

As the workforce grows, so do its digital capabilities. A key focus in the reporting year has been the implementation of a new Human Capital Management tool. Once fully implemented, this will give employees and managers the ability to manage, access and track their learning centrally. It will also provide a platform for recruitment, onboarding, performance management, succession planning, and talent management.

Cargolux continues to review its approach to learning. This year, staff were given the opportunity to help shape the future of learning here at Cargolux through a staff survey. They shared their ideas on preferred learning modes, development needs, and suggestions for new approaches. This will contribute to future learning strategies.

SDG#5: ACHIEVE GENDER EQUALITY AND EMPOWER ALL WOMEN AND GIRLS

GRI 102-41, GRI 401-1, GRI 401-3, GRI 404-1, GRI 405-1

Cargolux is blessed with a population from 70 countries throughout the network, and 44 countries at the HQ Luxembourg. Its people recognize excellence and collaboration. The airline enjoys a workplace where people are judged by their ideas and contribution, not by their gender, religion, or ethnicity. Equality programs include:

Part-time for all employees:

Cargolux flight crews enjoy an enhanced part-time scheme. In 2017, a new permanent, part-time option was added, allowing pilots in the program to take 4 extra days of off-time during the first 10 months of the year, and 3 during high season. This, like the other part-time options, is optional and voluntary and must be agreed between the individual and company. Ground staff also has the opportunity to work part-time. Requests are evaluated in line with business requirements.

Gender balance & equivalence: In an extremely male-dominated industry, Cargolux strives to provide an environment, programs and initiatives that support diversity and gender equality. Two women serve on the Board of Directors, one serves in the Executive Committee, and five (including excom) are in executive management (VP and above).

Female pilots and apprentices: Cargolux prides itself on the balanced and welcoming company environment. Each year, the airline concentrates on ensuring that no matter the gender, ethnicity, or religious beliefs of an employee they are accepted and respected. Cargolux also believes that visible demonstration of its foundational principles is important. The company employs staff from 70 different countries throughout the network and is working toward gender inclusiveness in job categories that are normally male-dominated.

With relatively stable workforce growth, Cargolux also supports numerous jobs in industries directly related to its air freight activities, in Luxembourg and throughout the world. Cargo/Logistics account for 2,910 jobs at Luxembourg airport with 46% of direct employment. This includes employment of freight forwarders, storage facilities, as well as Cargolux Airlines International and Luxair cargo employees 6.

Cargolux falls within the top 10 of Luxembourg’s most attractive employers[1] and is one of the largest employers in the private sector[2]. For its employees based in the Grand-Duchy, Cargolux follows Luxembourg labor law regulations, such as parental leave, which rank among the highest employment standards within the EU. In addition, a Collective Working Agreement (CWA) is in place to ensure advantageous conditions for Cargolux employees. 86% of employees fall under the CWA. Cargolux also offers a Swiss Life Pension scheme for Luxembourg based staff and comprehensive business travel insurance coverage for all employees worldwide.

We know that succeeding in the current dynamic, ever-changing world requires us to make some profound changes to how we work and how we think. That goes beyond modifying processes and systems; we also need to change our mindsets and our relationship to change itself. HR aims to be a key enabler for the Cargolux 2025 transformation journey by helping develop our employees’ resilience, agility, capability and confidence to succeed, across the board. With Connecting Flights and other strategic HR initiatives we want to engage, enable and motivate our people so that they feel connected, ready and able to work together on shaping a successful future for Cargolux.

In line with its vision to be the Global Cargo Carrier of Choice, Cargolux’s mission is to deliver consistent flexibility and reliability through its valued and dedicated employees, creating sustainable benefits for all stakeholders in a safe environment. Knowing that its success relies on the commitment of its workforce, Cargolux gives high importance to building and nurturing mutually beneficial long-term relationships with its employees. The reputation and the achievements of Cargolux are built on team spirit and family-like atmosphere among the staff. This atmosphere has been instrumental in the company’s growth and prosperity. Maintaining it is essential to ensuring the airline’s long-term success in an increasingly competitive market environment.

In working towards realizing its strategic ambitions, the airline decided in 2016 to place an even stronger emphasis on reinforcing its key values, which make up the Cargolux Spirit. A culture enhancement program, “Connecting Flights”, was launched in 2016 and continued into 2017.

Connecting Flights focuses on living the eight core values of the Cargolux spirit. The eight core values are the hallmark of Cargolux’s success and act as the key guiding principles for the company’s employees in their day-to-day activities that bring the airline’s mission to life.

These values serve as the foundation for an even stronger, more agile and forward-looking global team, and are at the center of the ‘Connecting Flights’ program. This program aims at reshaping the company’s culture and revitalizing Cargolux’s spirit. In 2017, the program focused on ‘V2B – Values to Behavior’ workshops, encouraging employees to openly discuss and align their understanding of the core values and to translate that understanding into everyday behaviors that contribute to a positive workplace culture. As well as aligning the company’s culture, and revitalizing Cargolux’s unique spirit, ‘Connecting Flights’ also aims to provide a platform for tapping into the creativity and drive of employees all over the organization in order to bring about improvements and new ideas in open, collaborative cross-divisional working groups established outside the traditional hierarchical structures. These initiatives are expected to enhance the outcomes of the recently launched Business Process Review, which aims at further improving the efficiency and excellence of Cargolux’s business activities. This initiative increases collaboration across departments and locations, and supports Cargolux in realizing its vision. The project is closely aligned with other strategic talent management initiatives such as succession planning, clarification of career paths and talent development, including management and leadership trainings. This holistic approach aims at increasing the resilience of the organization and further developing key skill sets by building on the strengths of the airline’s employees throughout its extensive global network.

The organization has recognized crew fatigue as a hazard that must be monitored and managed. Consequently, the Cargolux Fatigue Risk Management System (FRMS) is an integral element in its Safety Management System (SMS), using recommended practices based on ICAO guidelines. A dedicated group of FRMS Safety Officers, pilot representatives and flight operations management, meets regularly to discuss fatigue-related issues and recommend processes and procedures to reduce and/or manage crew fatigue.

The Cargolux Flight Academy fulfills Cargolux Group pilot training requirements and also markets crew training capacity to third-party customers. In contrast to other providers who mainly employ retired pilots, Cargolux’s trainers are active line-pilots with an average of 15,000 flight hours, and over 20 years of 747 experience at Cargolux under their belt. In addition, as cargo pilots, Cargolux trainers are well versed in operating to demanding schedules and can transfer knowledge regarding special requirements related to difficult airfields in remote or less than ideal locations that passenger airlines do not frequent.

Cargolux was the launch customer for the Boeing 747-8F, it also introduced the world’s first 747-8F simulator and has since converted it to Level D status, the highest possible qualification. Cargolux, today, employs one of only four advanced 747-8 training units worldwide. Both Cargolux simulators, the 747-400F and the 747-8F, are equipped with state-of-the-art visuals.

The airline’s Flight Academy is the only approved training organization worldwide to offer 747-line training to third-party pilots. It also markets the capacity of Luxair’s new cabin training simulator to third parties.

As an investment in the future, the airline seeks to support Luxembourg youth in their career choices and decisions. Cargolux seeks to sponsor the next generation of air cargo professionals through close cooperation with schools and institutes in Luxembourg. The Cargolux Human Resources (HR) team performs presentations about the company at schools associations and other institutions. The team also attends events for job seekers, presenting openings and career opportunities at the airline. Cargolux welcomes and offers CIE contracts in collaboration with ADEM, Luxembourg government’s employment agency.

Helping First-Time Jobseekers: Cargolux actively supported two programs run by Luxembourg’s Employment Administration (ADEM), which aim at facilitating young job-seekers who have completed their studies to access on-the-job training and gain professional experience. One is the “Contrat d’Initiation à l’Emploi” (CIE), which provides a legal framework for on-the-job training positions, in accordance with Luxembourg labor law, setting remuneration levels and other practical modalities. At the same time, the employment administration waives employer contributions and participates in the trainee’s remuneration, making this scheme attractive both for employers and first-time jobseekers.

About Apprenticeship: The airline has a long-term, cooperative relationship with Luxembourg’s Lycée Technique Privé Emile Metz (LTPEM) that runs an aircraft mechanics apprenticeship program. Students that successfully pass their exam become B.1.1-licensed AML aircraft mechanics with an opportunity to gain employment at Cargolux.

B.1.1-licensed mechanics are certified to perform mechanical and/or avionic works during base- and line-maintenance. Graduates from Luxembourg’s AML apprentice scheme obtain a license in accordance with EASA regulations, Part 66. After obtaining the AML, the junior mechanics must complete an in-house type rating training for the 747-400F and 747-8F aircraft to be fully licensed to work on Cargolux aircraft. The practical part of the apprenticeship takes place in Cargolux’s own workshops. This not only applies to Cargolux students, but, in the frame of enhanced synergies between Cargolux and Luxair, also to students at Luxembourg’s national carrier.

The University of Bad Honnef also enjoys support such as knowledge exchange and provision of expertise regarding demands and changes in the industry for its Aviation Management programs.

In 2016, Cargolux began a review and confirmation of its strategic focus. The resulting Cargolux 2025 strategy, drafted in 2017, has three pillars: Strategic Measures, Business Process Review and a Digital Roadmap.

These goals are reflected in virtually all activities of the company. Ultimately, Cargolux 2025 is aimed at ensuring the continuity and sustainability of the organization. At its heart is a built-in flexibility that allows the airline to be agile and lean, ready to seize market opportunities without undue additional costs.

Strategic Measures: Cargolux’s new strategic plan emphasizes having a flexible fleet, able to take advantage of changing market conditions without undue additional cost.

Digital Roadmap: A main tool of Cargolux 2025 is a review program that has mobilized staff and management around finding better, and even more productive methods for executing key business processes. This integrated digitalization of key processes and improved communication between divisions/departments are welcomed by-products of this holistic and systematic review. With each supply chain automation comes an even stronger connection with the customer.

Business Process Review (BPR) & Design:
Cargolux staff are proud of their work and organization but they continuously search for improvements. During 2017, the airline embarked on a company-wide transformation initiative to modernize work processes, “future-proof” the organization and thus ensure the sustainability of the airline. This program contributes to job stability and growth, and includes training in more efficient work practices (Lean), particularly in M&E. The BPR is an element within the Cargolux 2025 goals of digitalization and transformation. It highlights employees at every level of the organization as they identify even small changes that can make a big difference. With retention rates that far exceed the norm in most industries, the seasoned Cargolux team is well-placed to give feedback on how to move to a leaner, more agile environment, and are providing information that is integral to the BPR decision-making process. This BPR ensures that Cargolux is taking every opportunity to strengthen the relationships with long-standing customers and create an unassailable value proposition for new ones.

In September 2017, the M&E Division launched a comprehensive improvement program. The objective of the program is to review critical M&E processes and to introduce new technologies thus assuring the competitiveness of the division for the future.One of the methodologies used is Lean Management which systematically minimizes waste. In parallel, training in Lean Management principles was introduced for all M&E Staff. By using this new knowledge, staff are able to apply the principles in their daily work, and improve processes and standards in M&E.

Pilot projects were launched in Shipping & Receiving where the work area was redesigned to improve process flow, and for the preparation of hangar checks. The project for hangar checks aims to improve the check preparation process and to enable better control of check execution. The next significant M&E improvement project will be the introduction of mobile devices in maintenance, which will digitize the main work processes, eliminating most paper work cards.

Cargolux’s objective is to guarantee the optimal balance between the quality of goods and/or services and cost effectiveness. This fundamental principle ensures that the airline can support its partners and service providers with sustainable business practices. This is especially important in such a highly competitive field. Its Procurement Policy guides all staff through a consistent and vetted process which considers the environmental impact of goods (eg, investments, transportation, storage, etc.). This means that cultivating and encouraging local providers is an important element in the process. The Contracts and Procurement process provides suitable segregation of decision-making and duties between the department requiring the goods/services, procurement, and payment approval.

As a general rule, each department is responsible for procuring its required goods/services. Cargolux uses a standard tender process that employs frequent dialogue to ensure as much information as possible is available. The tender process includes receiving at least three (3) bids for any specific requirement and then discussions with the supplier and process owner to refine understanding of any boundaries or constraints. Potential suppliers are selected based on objective criteria such as technical expertise, past experience, quality of proposed staffing, relevant credentials, resources, geographical coverage, possession of necessary licenses (where applicable). All contracts must specify goods/services required, milestones, method and timing of payments. As an international company, Cargolux takes pride in working with suppliers of different sizes and ownership structure. It chooses suppliers based on their ability to provide goods/services of high-quality that are cost effective.

of the orders done by General
Purchasing are with Local Suppliers

The order Value of LocalProcurement represents

Innovation is a hot topic everywhere, including at Cargolux. Innovation comes from individuals, but it requires sponsorship from management to work. Cargolux capitalizes on the best and brightest ideas to outperform competition.The whole team strives to continuously identify customer needs and to design innovative and winning solutions for the industry.

take off noise footprint (747-8F)

30%

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Brainwaves: The Cargolux employee suggestion scheme is an ongoing program that encourages the staff’s creative thinking, providing a channel for innovative ideas to enhance the airline’s efficiency, productivity and to improve the performance and quality of day-to-day work. Suggestions are evaluated by specialists in the relevant area of the organization and successful proposals are implemented and rewarded.

Big Data! Cargolux supports and capitalizes on technological innovation in the industry to detect and correct problems early. Smart on-board sensors are processing and storing more and more information. Maintenance and Engineering (M&E) uses this data to predict trends in the aircraft’s health, and each component on board. Instead of just following industry averages for checks, the team now watches trends and is more in tune with the optimal timing for all aspects of maintenance and service. As well as lowering cost, this approach will ultimately increase reliability, efficiency and safety.

Drones: Adding to safe maintenance practices is part of the DNA of M&E. In 2017, the Cargolux team tested the use of drones for inspecting aircraft surfaces. Drones provide detailed information and high-resolution photos to assess potential problem areas or damage without anyone leaving the ground.

Cargolux is aware that its activities affect the communities around the airports it operates from and strives to minimize the impact of these activities as much as possible. Noise control and monitoring is therefore an important area of environmental concern for the company; especially in Luxembourg where most of its aircraft movement takes place.

Cargolux operates the world’s quietest freighter aircraft in its class. Both the Boeing 747-400F and the 747-8F represent a significant measurable improvement for the surrounding communities. The 747-8F, with advanced engine technology and new wing design, reduces the already low 85db take-off noise footprint by another 30%. Both aircraft types fully comply with ICAO chapter 4; the most stringent aviation standard.

Additionally, the company continues to identify, study and implement operating procedures that provide further opportunities for efficient and conscious noise management, fuel optimization and CO2 reductions. Substantial gains have been realized through programs such as:

Reduced Flap Settings: Using revised flap settings reduces the amount of thrust required by the engines for landing. In Luxembourg, landings are limited to idle reverse thrust to reduce noise levels.

APU Off: The aircraft’s auxiliary power unit (APU) is not used for arrivals in Luxembourg to reduce the noise on the ramp. Instead, a ground power unit is used to supply electricity to the aircraft.

Active Quiet Climb: This takeoff procedure is used while overflying noise-sensitive areas and incorporates a climb to a certain level before reducing engine thrust. This procedure is used with the company’s new 747-8 fleet.

Three Engine Taxi: Cargolux aircraft shut down one of four engines during taxi to the parking position.

Continuous Descent Approach:
Developed in collaboration with Cargolux, ANA (Administration of Air Navigation), and Luxair, and with coordination from DAC (Direction de l’aviation civile), this approach design decreases noise within a 10+ nautical mile radius of Luxembourg airport. It permits an aircraft to follow a continuous descent path; optimizing speed and trajectories. This smooth-profiled descent replaces the stairsteps method, where descent permission is granted in stages, as the plane holds at different altitudes.

Supporting an innovative environment is a standard discussion item in Cargolux. The latest e-mobility project in M&E is testing the viability of digital aircraft maintenance and overhaul. Currently, thousands of pages of manuals and task cards are printed each year. A digital process that employs iPads and electronic process management software saves paper, time, and effort. It also enables better information sharing, including allowing statistics to be tracked and reported more easily and accurately.

On the Flight Operations side, the introduction of the electronic flight bag (EFB) helped to reduce aircraft weight by eliminating all paper, including maps, from the cockpit and post-flight process. The latest development in this technology is in­dependent electronic flight bags. These EFBs are not attached hardware in the aircraft. Paired to any device, they allow apps to be loaded, making it easy to update or even change out the EFB. With real-time ground-to air communication functionality, they furnish a variety of data that can be used to monitor and safeguard the flight and its contents.

For the customer, e-booking is used to book shipments on Cargolux flights. It supports customer information and provides shipment information anytime, anywhere, without the need for cumbersome email chains or telephone calls with booking agents. This ‘order to cash’ approach, removes the need for repetitive, onerous routine work and increases the shipments’ visibility.

Environmentally Friendly Beam Solution:
In 2017, Cargolux Airlines signed an agreement with Trinkaus-Solutions (Germany) for the use of its squAIR-timber product. These humidity-resistant, cardboard fiber composite beams have a load capacity of up to 10 tonnes and only contain raw materials from sustainable sources. With a weight of only 1.2 kilograms per meter, the beam is 80% lighter than conventional wood and allows more payload and lower fuel consumption for Cargolux aircraft. This directly translates to lower aircraft engine emissions. Cargolux estimates that the use of squAIR-timber has the potential to reduce its fuel consumption by roughly 1,200 tonnes per year.
In addition, squAIR-timber solution enables shorter build-up times, eliminating the need for forklifts as they can easily be handled by one person. They can be reused and are 100% recyclable with lower disposal costs than wood.

Cargolux is an airline with an intense focus on environmental issues and appreciates the full recycling capability of squAIR-timber product. It is the first airline worldwide to introduce this lightweight material in its operation, and currently uses it on all pharma shipments out of Luxembourg. The use of modern, environmentally-conscious tools in air cargo underlines Cargolux’s standing as a green cargo carrier and its commitment to the airline’s customers, who increasinlgy appreciate working with environmentally responsible partners. With the squAIR-timber product, Cargolux offers its customer an enhanced and more flexible service while using environmentally-friendly materials.

Cargolux – SkyCell Partnership:Cargolux and SkyCell have teamed up in a container rental partnership to offer Cargolux’s pharma customers enhanced service. SkyCell is a Swiss-based, award-winning provider of temperature-controlled container solutions, with a special focus on emerging markets and sustainability. This initiative has one overriding goal: producing the safest container on the market. With its new containers, Cargolux can safely transport pharma products in the +2°C to +8°C and +15°C to +25°C range, with outside temperatures between -35°C and +65°C, even over multiple days. The hybrid function of the SkyCell containers compensate for temperature segregation issues at destinations where the facilities cannot accommodate pharma shipments with stringent requirements. The SkyCell containers heighten service quality while lowering weight and increasing net volume – effectively reducing CO2 emissions. The 100% recyclable components contribute to the Cargolux lean philosophy, while underlining its sense of responsibility for the environment. The containers are a boost to Cargolux’s cool chain transport services that also offer personal attention, detailed tracking, and temperature monitoring for its customers.

Cargolux operates a fleet of modern Boeing 747-8 and 747-400 freighters; the world’s quietest and most fuel-efficient freighter aircraft in its class. Both the Boeing 747-400F and the 747-8F represent significant advances in engine technology and wing design, which reduce take-off noise and fuel consumption.

Additionally, the company continues to identify, study and implement operating procedures that ensure responsible consumption and provide further opportunities for improving production efficiency.

In 2017, a new Environmental policy came into effect which reflects the changes in the ISO 14001 2015 standard. The Environmental policy is the master document of ISO 14001. It provides a summary of the company’s environmental commitments (Fuel reduction; improvement of carbon footprint; reduction on waste; transparency, etc.) During 2017, the company readied itself for certification renewal in 2018 (according to the new ISO standards). This is well within the deadline to comply with the new requirements.

In terms of Global Logistics, the TMS (Truck Management System) reduces the number of trucks on the road by optimizing load / location / availability data. TMS allows third-party trucking fleets to operate more effectively with Cargolux in Europe.

Cargolux runs a waste management system that enables the company to better control and segregate the waste it generates. This system is operated by a specialized external company that manages and monitors the correct collection, separation and disposal of all categories of waste, including recyclables and hazardous waste.

Recycling is an important factor in the company’s waste management system. All facilities and rented offices in Luxembourg are equipped with a waste-sorting and recycling system. Wastewater from the airline’s maintenance operations and maintenance facilities in Luxembourg are collected directly by the airport sewage system and sent to a wastewater treatment plant.

The company handles oil-contaminated waste with an innovative oil absorber product as well as waste compactors that have the added benefit of reducing transportation costs and emissions that would otherwise result from the waste disposal process. The Cargolux Maintenance Center recorded no spills during the year.

Although Cargolux enjoyed a 7.9% increase in flight activities, which leads to higher utilization, waste disposal remained stable.

Paper recycling is integral to waste management efforts. The company encourages its staff to adopt measures that reduce waste production such as using electronic storage for documents and communication, or using recycled paper more.
In the context of ‘Digital Cargolux’, each division is reviewing its processes which will ultimately result in reduced paper or even paperless processes for the future. These initiatives include:

OHS started a test phase to run paperless Risk Assessments for OHS.

Global Logistics: The Compass project is part of a process review and will result in a reduction of paper exchanges with GHA (LUX).

M&E initiated an e-mobility project that will result in a reduction of paper.

HR is in the process of implementing a new digital HR platform where several processes will be moved from paper-based to digital, starting with recruitment and onboarding.

The replacement of high-pressure halogen (HQ) light fixtures in the hangar with LED lights resulted in significant energy savings and allowed Cargolux to take advantage of new technology in the field. It also has a positive impact in terms of waste reduction.

One of the best carbon footprint in its class

Jet fuel

Carbon footprint

SDG#13: TAKE URGENT ACTION TO COMBAT CLIMATE CHANGE AND ITS IMPACT

It is undeniable that aviation plays its part in the global climate change, but world trade, global economics, healthcare and a decent standard of living rely on sustainable air freight transport. Cargolux recognizes its responsibility toward the environment and its impact on the communities around the airports it serves. It accepts its obligation to lessen this impact as much as possible and firmly believes that achieving this goal requires the collaboration of all partners in the transport chain as well as aircraft and engine manufacturers and governments.

Cargolux is witnessing a growing commitment for environmental and social awareness, among its staff, customers, and the industry in general. Cargolux strives to continuously expand its engagement toward the environment, its neighbors, and the people whose livelihood rely on the economic success of the company.
This continues to contribute positively to the actions and programs it has in place; programs that have been recognized by authorities and organizations alike as shown by ISO 14001, Lean & Green, and ‘Superdreckskescht fir Betriber’ environmental labels. ‘Superdreckskëscht’ is a program run by Luxembourg’s Ministry for Sustainable Development and Infrastructure. The label is awarded to Luxembourg companies that demonstrate exemplary waste management practices, including waste avoidance measures, safe and environmentally-friendly waste storage, selective collection and a transparent waste recycling and disposal system. This certificate is subject to annual renewal following audits that verify the Company’s adherence to these principles.

LABEL OF ENVIRONMENTAL EXCELLENCE

Cargolux commits to:

•an improvement in average fuel efficiency of 1.5% per year until 2020;

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Cargolux has defined near- and long-term goals that follow IATA’s targets for airlines to reduce CO2 emissions with the aim to ventually achieve carbo-neutral growth. During the 2017 reporting period, the company reduced its carbon footprint by 2.2%, which is well above IATA’s goal of 1,5% per year until 2020. Since the introduction of the 747-8 freighter in 2011, Cargolux has increased its fuel efficiency by 10%.

CO2 emissions reduction & control are important first steps toward a carbon-neutral company. Cargolux complies with the European Union’s Emissions Trading System (EU-ETS) reporting requirements and continues to monitor and report CO2 emissions.

Greenhouse Gas Protocol Scope:

Reducing waste; improving recycling: Although CO2 emissions are considered to be the most harmful of greenhouse gases, Cargolux is also addressing other waste contributors that impact the environment and emissions for the fleet and the company.

Core engine compressor wash: This cleaning process is performed on the GENX-2B, CF6-80C2B5F and selected RB211-524H2-T engines with low N3 speed margin. Engines are washed about twice a year.

Performance improvement package (PIP): is a retrofit program for the airline’s GEnx engines from the early 747-8Fs. This initiative improves the efficiency and life of the engine and has a positive impact on fuel consumption.

Cargolux operates a fleet of 27 Boeing 747-8F and 747-400F. The B747-8F represents a significant monetary investment for the company but this fuel-efficient and quiet aircraft yields excellent results operationally and environmentally. Communities especially, benefit from a further 30% reduction in take-off noise compared to the already excellent values of the company’s 747-400 freighters. Operating the most efficient and environmentally friendly aircraft results in a measurable improvement in fuel efficiency as well as a reduction in noise and CO2 emissions.

Flight Operations further supports the goal of increased fuel saving and reducing CO2 emissions, through route and network optimization.
This gives preference to direct flights over tech­nical stops and employs random routing, and fair-weather alternatives.

The Fuel Efficiency Round Table, initiated in 2016, is a perfect example of cross-divisional projects within Cargolux. With Flight Operations taking the lead, many other departments also contributed to its success. Maintenance, Engineering, Ground Operations, Network and Crew Training – everyone involved in this Round Table is an expert in their field, promoting the project within their division and department. The Round Table’s primary mandate is to identify potential savings and take steps to realize both lower environmental impact and improved bottom line. With the help of such a focused group, Cargolux is able to capitalize on its fuel efficient fleet advantage by further reducing fuel burn per block hour by as much as an additional 0.5%.

To support this, high-quality data is crucial. Cargolux uses a technologically advanced fuel efficiency software that simplifies data gathering, analysis and reporting, helps to identify additional fuel savings, and monitors the progress of existing fuel saving initiatives. Without a doubt, Cargolux has led the way in both reducing its environmental impact as well as lowering its fuel cost per hour, making it one of the most efficient B747 operators in the industry today.

We focus every day on constantly reducing our environmental footprint. We develop initiatives to address environmental responsibility in everything we do.

SDG#16: PROMOTE PEACEFUL AND INCLUSIVE SOCIETIES FOR SUSTAINABLE DEVELOPMENT, PROVIDE ACCESS TO JUSTICE FOR ALL AND BUILD EFFECTIVE ACCOUNTABLE AND INCLUSIVE INSTITUTIONS AT ALL LEVELS

GRI 205-1, GRI 205-2

Cargolux ranks as a leading supplier of high-quality air cargo services to customers around the world and thus, works with a variety of cultures. The airline has committed to support and strengthen an ethical business culture that promotes compliance with all applicable laws and regulations, and adherence to internal rules and policies. An ethical corporate as well as individual attitude, fosters sustainable and profitable long-term business relations, built on trust, and prevents risk to reputation or financial damage.

Just Culture: Cargolux operates under the Just Culture principles. This concept has been specially developed to enhance the reporting of safety-related events but Cargolux has also decided to extend the principles throughout the whole organization. Just Culture aims at reinforcing an atmosphere of trust in which people feel encouraged to provide essential safety related information. The Just Culture approach balances the objective to establish a constructive, non-punitive reporting and learning environment with the recognition of the need for accountability of individuals for their actions.

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SDG#17: STRENGTHEN THE MEANS OF IMPLEMENTATION AND REVITALIZE THE GLOBAL PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT

GRI 304-3

As a good neighbor and supporter of cultural and educational activities in Luxembourg, Cargolux supported a range of initiatives and signed a number of partnerships in 2017. Local artists and cultural institutions were sponsored, as well as humanitarian causes, through its cooperation with non-governmental organizations that help people in need.

With a worldwide presence, Cargolux is in a perfect position to enrich the cultural life of its home country and to support Luxembourg artists in their international exposure. In 2017, Cargolux signed a 3-year partnership agreement with the MNHA (Musée National d’Histoire et d’Art) to transport exhibits free of charge. The company has also supported MUDAM and its artists for more than a decade. Whether moving whole art exhibitions or a single installation, Cargolux has an outstanding reputation in the art world for being safe, professional, and always on time. Sponsorship by Cargolux helps MUDAM, and Luxembourg, stay in the foreground of the contemporary art world. In an industry where reputation influences the ability to collaborate with other museums, credibility is very important. It is accomplished artists and professional suppliers like Cargolux that help MUDAM build its international reputation.

Cargolux has a longstanding expertise in flying artwork and valuable goods and its CV Precious product not only meets the highest security standards but sets them. Logistical planning around an art exhibition does not start with the transport and, due to the size and bulkiness of the artwork, the feasibility of an exhibition becomes increasingly dependent on Cargolux’s support and ample experience in the field of art transportation.

Cargolux also supports Art2Cure, a charity that organizes art events to raise funds in support of Luxembourg Centre for Systems Biomedicine (LCSB), a biomedical research center that studies neurodegenerative conditions with a focus on Parkinson’s disease. Art2Cure receives art donations from high-profile Luxembourgish artists that are sold at an exhibition event to support the research.

Cargolux recognizes the importance of being involved in, and supporting, local events and activities. Science, technology, and the environment are all closely related to the air cargo industry and to Cargolux’s CSR endeavors. The airline is proud to be active sponsors of…

Luxembourg Science Center: In 2017, Cargolux partnered with this new science and technology discovery center which offers about 100 experimental stations in Luxembourgish, English, German, French, and Portuguese.
The partnership includes sponsorship for the center’s exhibits, and transportation support for equipment and important elements for interactive displays.

Science week: This fun annual event introduces and promotes science, scientific activities, and studies in Luxembourg. It is used to pique the interest of young people, and to showcase Luxembourg’s commitment to this important industry to the public. Activities and exhibits help participants become more curious about science, technology, and jobs in these fields.

Hëllef fir d’Natur: Cargolux makes an annual contribution for this worthy Luxembourg environmental foundation. This contribution sponsors the acquisition and transformation of woodland into protected nature reserves. This program helps safeguard the natural heritage and biodiversity of Luxembourg.

• Widdebierglaf in Mensdorf: This cross-country run’s claim to fame is the challenging elevation and conditions. Old and young runners alike can face rain, and mud, on their uphill journey into the forest.

A positive customer experience is the building block of good business. The company’s Global Accounts Team focuses on dedicated customer contacts and short reaction time for requests and to market developments. The airline’s Pricing Department also plays an important role in customer relations and provides enhanced data and information. The Product Team members help customers with special cargo requirements and tailor-made solution for specific needs.

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This CSR annual report provides information about ongoing CSR initiatives and programs as well as an update on new programs started during the period of 01/01/2017 to 31/12/2017 and pertains to Cargolux’s overall operations and geographic presence, except where otherwise specified in the report.

The report describes the company’s efforts within an incredibly competitive industry and stressful market environment that challenged the global air cargo industry. Despite changing annual difficulties and economic realities, Cargolux is committed to, and takes care of environmental and social issues that impact its business, partners and local communities.

Certain indicators cover Luxembourg-based activities only. These include figures relating the company’s employees and data related to occupational health and safety. Data monitoring and the company’s waste disposal also relates to its facilities in Luxembourg only. The report does not cover the activities of separate legal entities fully or partly owned by Cargolux. Monitoring of fuel consumption and CO2 emissions includes the data collected by Cargolux Italia. The development of details included here, is based on the continued analysis of the company’s main impact and responsibilities. It encompasses concerns for the environment and society, and concerns raised by key groups of stakeholders in this area.

This report has been prepared in accordance with ‘GRI Standards: CORE Option’ in line with the Sustainable Development Goals Framework enacted in 2017. Cargolux endeavors to constantly review and further elaborate its Corporate Social Responsibility program and the Sustainability Reporting Process.

This report is reviewed by an independent third party, which provides limited assurance. The previous report was published in April 2016.

CONTACT POINT

Cargolux invites all interested parties to enter into dialogue about its sustainability policy, its activities, and this report. The company’s policy, details about its activities, and previous reports, can be found on its website at http://csr.cargolux.com. All comments and enquiries are welcome and can be forwarded through the contact form on the aforementioned webpage, or by writing to corpcom@cargolux.com.